Is it just us or has this market been terribly quiet recently? Taking a look at the turnover figures for the JSE it seems that it is just us. There have already been two days this month when turnover exceeded R4bn and very few days failed to get above R3bn. Much of the turnover, however, has been “professional” in nature as the large derivatives houses prepare themselves for next Thursday’s futures close out event. It would take far more time, space and energy than any of us have on a Friday afternoon to try to understand what that last sentence means. So let’s just accept that I have had a bit of time to dig around the data.
In the past month or so almost 100 different companies have announced results and (with luck) declared a dividend. Whether that dividend has been greater, similar or even lower than what was paid last year provides wonderful material for a calculation or two.
In aggregate, across the whole market, the so-called dividend base (price times dividend yield equals dividend base) has been pretty much flat for almost 18 months. However, there have been huge differences from sector to sector. Most spectacular has been the industrials, where current dividends are running about 23% up on last year. Financial sector dividends have maintained a steady annual growth rate of between 10% and 15% for almost two years. So it comes as no surprise therefore to learn that the resources index dividend base is now 25% lower than a year ago. Something had to be counteracting those other two good numbers.
Some more thoughtful prods at the calculator keys suggest that the resource share prices have not yet declined in complete sympathy with those leaking dividends. Everyone hates selling Anglo and Goldfields and Impala! It seems as if most of us are holding on in the hope of a terrifying collapse in the rand and a consequential leap in the sector. What a dilemma.
This week the banking shares received boosts from a number of sources including stories of foreign suitors. I am puzzled by the idea that anyone would want to operate a retail banking business in South Africa given the looming presence of all those politicians and bureaucrats who appear to have much better ideas about how to run one. The Robin Hood model comes to mind.
Which leaves us scratching through the industrials for shares which have not yet responded to the consumer boom – surely the main driver of all these wonderful results? What do you think of Caxton, Woolies, Metcash, Imperial, Truworths and Bidvest? Let me declare that I bought some Caxtons myself this week. Well, I had to do something about the turnover!
Late night tennis from New York, the Monza Grand Prix and a long expected family reunion will keep me happy and busy this week end. Don’t mention the cricket. I hope you have nice plans too.
James Greener
10 September 2004
